We all know about the traditional currencies which are backed by Gold (past), backed by petrol or crude oil or any precious metal, but unlike a traditional coin, Bitcoin which currently has the value in more then $5000 Dollars is not backed by anything like that. It’s not the currency which you can hold in your hand or stick it somewhere. It’s a digital currency which means it only exists electronically.
Bitcoin doesn’t work like most money, and there are various other cryptocurrencies which are similar or better than bitcoin in every other characteristics. But Bitcoin unlike any other traditional currencies isn’t attached to any state or government authority which means there is no central issuing authority who controls it.
How does Cryptocurrency works as a currency:
Bitcoin won’t exist without a whole network of people and a little thing called Cryptography infact, it is described as the world’s first cryptocurrency and here is how it works.
Bitcoin is a digital currency which you can exchange between computers in a world wide peer-to-peer network. The whole point of peer-to-peer network is to share information. Unlike a mp3 file or a PDF, Bitcoin is not an information which can be duplicated, otherwise you duplicate currency and you can become insanely rich. But that is not possible.
Bitcoin is actually an entry on a huge global ledger called Blockchain. As of 2016, the data recorded on the ledger is 107 Gigabytes. This is not the central authority. There are a lot of other people keeping the track of the same thing, thus the data is verified and all the transactions are accurate.
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